- VMware and AI strength are the two main reasons for the Q3 revenue and EPS beat.
- Increase 2024 full year AI revenue from early projection of $11B to $12B
- Margin increase to 63% and expect to see continued improvement in Q4
- Q4 total revenue forecast $14B a bit shy of $14.1B expectation
- Did not provide 2025 financial guidance (AVGO normally does not provide next year guidance until Q1)
- As expected, analyst's main questions were around AI growth and specifically, trying to guage if AVGO can see accelerated AI growth in 2025. They are clearly concerned about any potential slow down in spending (as the same concern investors are having on nVidia). Hock's answer here is very straightforward -- they do not participate in broader GPU market, and only focus on hyperscalers who need to find ways to build their customized GPU. That is the main driver for AVGO AI. However, Hock never directly answer the questions about potential revenue target in 2025 so I think investors will take some "prove it to me" stance
Overall, a solid report. At 145, AVGO is now priced at forward PE of 25. My best guess is AVGO will be range trade between 135-155 until next earning (depend on how broad market does). Analysts are happy about increased AI revenue forecast but remain guarded on the future 2025 growth, given the bigger picture surrounding semi industry today
